S&P in long term perspective
Today I took a longterm view on Stocks.
I am currently completely out of stocks, basically expecting a crash and recession over the next few years. At least I see a decent percentage and have sold everything in my retirement account.
All but gold. I do not hold physical gold, which is a bit of a problem, but gold etf is the only thing I hold currently in my retirement account.
Fundamentally I believe that we have somewhat of a debt problem, that will trigger a big recession and deleveraging which may also end our financial system. Though central banks can always print any amount of money, bail out banks and keep the system running. If this view is wrong and everything will go up from here, my TA will show and I will simply jump back in. After we are above the 200 MA I will be all in again.
For now I expect a crash. We just fell thru a long term uptrend as well as many horizontal support lines. Together with the fundamental perspective it looks like things will move lower.
Below are some targets I have in mind.
Target 1: The previous low
The previous low around 1850 for the S&P falls nicely with the 0.5 FIB level. I guess 2100 is also a potential support before this. But 1850ish seems like a good first target, judging from previous low and price action as well as FIB retracement.
Especially if we just have a bit of a correction and the FED or trump intervenes.
This would be a great bottom, signaling that my fundamental concerns are either invalid not yet a problem. When we get here I will look for indicators that show further downside or retracement and adjust accordingly to stay short or out of the market or go back in.
Target 2: 50% Crash
The next target puts us at the 0.61 FIB which is around the previous high and would represent a pretty hefty crash of around 50% overall.
I find this somewhat most reasonable target considering everything and that our finacial system wont end within the next 3 years. This would indicate that we have a bit of an economic issue, similar to what happen in 2000 or 2008 but not anything that the FED or trump cant fix.
Or worse
If we go below 1500 something bad must have happened or be triggered such as many defaults, the end of the euro, global debt bubble popping or something similar.
I would not be surprised if this actually happens and hope to be prepared for it . Where this will go I don't know and don't care at this point. I will re-evaluate once we are below 1500.
Happy Investing!
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I can see 1850 happening. It has amazed me that investors keep ignoring the debt issues that are out there. These companies and governments (local, states, and federal) can't afford their current debt loads with increasing interest rates. They will all default, stop spending and move all current income towards debt servicing, or raise prices (companies) or taxes (governments) drastically. None of these are a good options for the economy. Debt is the death of sustained growth in any market and we have WAY to much of it.
I went flat on stocks also, got out while they were still up. I just see B&W soup lines pictures I wish to avoid. Great currency trading now though!
What I'm really interested in seeing is how these new tech companies that doesn't make money will do. Twitter, Snapchat, Uber and many others are just bleeding money all over the place and they don't really have much of a plan for future revenue. Except for some Chinese social media companies (maybe some Korean/Japanese companies) and FB, social media isn't really a profitable business. Their crash would be a very interesting one to see. It's certainly going to be great for STEEM.
Deutsche Bank seemed to be in a terrible shape and it's probably the same with rest of the EU banks. They won't do well if US stocks crash. If the crash does happen before the presidential elections, a socialist leaning candidate is going to have a very good chance t winning. This IMHO is the worst outcome for many reasons including China gaining a massive amount of global influence in weakened US economy.
"Fundamentally I believe that we have somewhat of a debt problem"
Yeah just a tad. lol
Scary times though. :(
Hopefully the USA and the global economy don't completely collapse.
That chart is actually very worrisome, look how high it reached without almost any support behind the "bull run". And they say Bitcoin is a bubble...!!?!?!?
My question is, which one will burst first, and my guess is very predictable... (I think you made the right decision).
As the market have overextended to the up side early last year, they do the same the down side as cycles move faster these days given on interconnected global economies are. I still don’t forsee the debt bubble popping but it is a possibility we start to see more than just cracks...
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